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Cohn: How Canada let Caterpillar strip a plant clean

Caterpillar carried off not just our jobs but our brainpower, our intellectual property. The tech train is leaving the station, and Canada is giving it a free pass.

U.S. heavy equipment maker Caterpillar Inc. announced Friday it was closing its Electro-Motive Canada plant in London, Ont., a month after it locked out about 450 workers. (Mark Spowart / THE CANADIAN PRESS)

Ask yourself this: Why did Caterpillar buy a plant only to destroy it?

The labour dispute at a London locomotive factory was nasty, brutish and short — a depressingly Hobbesian scenario in which brute strength prevailed over civilized rules of conduct.

There were no strikebreakers wielding clubs at Electro-Motive Canada, because there was no strike to break — the union was locked out on New Year’s Day. There were no replacement workers to bust the union, because the union was merely invited to slit its own wrists — by halving most wages from $34 to $16.50 an hour.

The U.S.-based owner, multinational giant Caterpillar Inc., didn’t so much humiliate 460 skilled workers as ignore them. It started and ended this negotiation with a carefully choreographed plan to pack up, shut down and leave town.

Clever multinationals — and this is one cunning Caterpillar — don’t spend hundreds of millions of dollars to buy a factory only to shutter it. So what was the plan?

It won’t just relocate the heavy equipment on the factory floor, but harvest the technological know-how subsidized with government incentives and writeoffs. This wasn’t bullying, it was highway robbery — with our politicians watching from the sidelines.

Caterpillar kicked those workers in the teeth, but we should be kicking ourselves for letting it acquire the legal right to do it as it pleased when purchasing the old locomotive plant. There has been much hand-wringing that foreign investment safeguards weren’t triggered, failing to ensure a net benefit to Canada with explicit job guarantees after the takeover.

But lost jobs aren’t our only loss. Be it Nortel or RIM, we need to value the technology and patents in play when foreigners start kicking the tires. The buyers are just as likely to be scavengers as investors. And if their primary goal is to spirit away our intellectual property, they will treat the ancillary human resources as an expendable asset to be stripped away, bargained down or locked out.

The $4.5 billion auction of Nortel patents last year made a mockery of the more modest valuations that the bankrupt company had put on its own treasure trove of intellectual property, nurtured by our tax dollars. Canadians always sell themselves short.

So the first lesson of the London massacre: Ottawa must be vigilant about vetting foreign investment and retaining jobs, but also mindful of valuing — and anchoring — our homegrown intellectual property. Why underwrite our companies if we willingly sell off our embedded brainpower to foreign bidders who leave Canada cash-rich, patent poor and jobless?

If RIM is one day placed in the shop window, are we ready for a fire sale of its technology? What if Bombardier — which also builds locomotives — ever goes on the auction block, patents aplenty?

Another lesson: When it comes to the economy, empathy isn’t enough. Premier Dalton McGuinty adopted a reflexively tepid tone from the start, expressing the vain hope that both sides would come to their senses. Belatedly last week, he ratcheted up the rhetoric by exhorting the plant’s owners to play fair.

But he never picked up the phone to the employer. Nor did he reach out to Prime Minister Stephen Harper to forge a non-partisan common front. When a company treats its workers like dirt, a premier should leave no stone unturned.

McGuinty and Harper must conduct a post-mortem. More Caterpillars are coming, and they will metamorphose into a plague on our intellectual property if we don’t start using our heads. I’ve argued before that globalization can bring benefits, but only if we’re smart enough to play defence as well as offence.

It’s too late to save the jobs in London. Caterpillar has closed a plant and cashiered its workers, but it has opened our eyes: it’s not just the jobs on the factory floor that are lost, but the technology that buttresses them.

A locomotive factory is gone. Now the tech train is leaving the station — with a free pass from our politicians.

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